Flynn v. Curtis & Pope Lumber Co.

• Citation: 245 Mass. 291
• Court: United States State Supreme Judicial Court of Massachusetts
• Decision Date: 25 May 1923
• Parties: CHRISTINE A. FLYNN v. CURTIS AND POPE LUMBER COMPANY & others.

245 Mass. 291

CHRISTINE A. FLYNN v. CURTIS AND POPE LUMBER COMPANY & others.

Supreme Judicial Court of Massachusetts, Norfolk.

May 25, 1923

March 15, 1923.

Present: RUGG, C.

J., BRALEY, DE COURCY, CROSBY, & PIERCE, JJ.

Mortgage, Of real estate: foreclosure, equitable mortgage. Equity Jurisdiction To establish rights as equitable mortgagor.

Upon findings of a master, without a report of evidence, in a suit against two defendants to have declared invalid a sale to a nominee of the first defendant in foreclosure of a second mortgage to that defendant from the plaintiff, a married woman, and a conveyance by that grantee to the second defendant, it was held, that

(1) It was plain that the mortgagor, personally and through her husband as agent, acquiesced in the entire foreclosure proceedings, knew of the time and place of sale, did not desire that the sale should be adjourned, and expected and desired the mortgagee to acquire title;

(2) The plaintiff therefore could not attack the foreclosure proceedings or the sale on the ground that the notice of the sale named a day of the month but no year, that an unlicensed customer acted for the mortgagee, that no one was present to bid, or that the mortgagee, though absent, caused the property to be bid in for himself through the auctioneer, although the mortgage gave no such power;

(3) The fact, that the mortgagee through his agent was the only bidder and was not personally present, was not as a matter of law sufficient to cause the sale to be set aside;

(4) The fact, that the auctioneer at the sale had not an auctioneer's license, did not invalidate the sale;

(5) In the absence of bad faith, there was no legal objection to the auctioneer making a bid for the mortgagee or purchaser;

(6) It was plain that the plaintiff consented to the foreclosure sale as it was conducted in the belief that the defendants would take title and would hold such title without a formal mortgage as security for the protection of themselves and of the plaintiff and that the defendants knew that the plaintiff consented that the title should be taken in the name of the defendants because she believed the defendants would hold the title not adversely but subject to a right of redemption in the plaintiff;

(7) Although neither the defendant mortgagee nor his nominee in whose name the title was taken in the foreclosure proceedings made an express agreement to hold the title subject to the understanding and belief of the plaintiff, above described which was known to the defendant, the acts of of the parties should be construed as evidencing an intention to put the legal title in the name of the defendant, and that the result should be held equivalent to a present loan of money from the defendant to the plaintiff upon the security of an absolute deed;

(8) The facts found plainly showed that the grantee from the record purchaser at the mortgagee's sale was an innocent purchaser for value and a decree dismissing the bill as to him was warranted;

(9) A decree directing the defendant mortgagee to account to the plaintiff for the difference between the fair value of the equity of redemption conveyed to the purchaser from the mortgagee's nominee and the amount secured by the equitable mortgage, after making all proper charges and credits, was proper.

BILL IN EQUITY, filed in the Superior Court on December 8, 1919, and afterwards amended, against Curtis and Pope Lumber Company, a corporation, Myer R. Rittenberg and Morris Finkelstein, to have declared invalid a sale to one Lucey in foreclosure of a second mortgage of the plaintiff to Curtis and Pope Company of premises on St. Paul Street in Brookline and a deed of Lucey to the defendants Rittenberg and Finkelstein; that the property be reconveyed to Curtis and Pope Lumber Company, who should be declared to hold it as mortgagee for the benefit of the plaintiff, and that the plaintiff be allowed to redeem the land from such second mortgage.

The suit was referred to a master. Material facts found by the master are described in the opinion. Exceptions to the master's report were heard by Hammond, J., by whose order there was entered the interlocutory decree described in the opinion. The suit then was reported to this court on terms described in the opinion.

J. B. Jacobs, (C.

A. Me Carron with him,) for the plaintiff.

H. P. Williams, (C.

G. Brownville with him,) for the defendant Curtis and Pope Lumber Company.

PIERCE, J. This is a bill in equity filed in the Superior Court, December 8 1919. The bill seeks to have declared invalid a foreclosure sale of a certain parcel of land situated in Brookline, Massachusetts; to have the defendants Myer R. Rittenberg and Morris Finkelstein, purchasers of said property, held to be purchasers with notice of the alleged invalidity of the sale and be ordered to redeliver said property subject to the first mortgagee to the plaintiff, upon payment of the amounts of money found to be due from the defendants or any of them. The bill further prays that the defendant company may be declared to hold said property as mortgagee or trustee for the benefit of the plaintiff, merely as security for the plaintiff's debt and that the plaintiff be allowed to redeem.

The case was sent to a master. Upon the coming in of the master's report, after hearing the parties, a judge of the Superior Court filed the "Memorandum and Order for Decree" which follows: "Upon the facts found by the master and the reasonable inferences to be drawn from them, I find that it was understood between the plaintiff and her husband, on the one hand, and the officers of the defendant corporation, on the other, at the time of the foreclosure sale in March, 1918, that the defendant corporation, acting through Lucey, its credit manager, was to take title to the property in question by virtue of a sale under proceedings to foreclose the second mortgage, and was to hold such title as security for any indebtedness due to it from the plaintiff and her husband, including moneys expended in the completion of the garage and dwelling house. I therefore rule that after the foreclosure sale Lucey held the property as equitable mortgagee of the plaintiff. I find and rule that the defendant Rittenberg was a purchaser for value without notice of any equitable rights. . . ." The judge then ruled that the plaintiff was entitled to an accounting, ordered the exceptions to be overruled, the master's report confirmed and the case recommitted to the master to take an account.

This order was followed by an interlocutory decree which ordered adjudged and decreed:

"1. That the plaintiff's exceptions to the master's report be, and hereby are overruled.

"2. That the master's report be, and hereby is confirmed. "3. That the defendant Myer Rittenberg is a bona fide purchaser for value, without notice.

"4. That the bill of complaint be dismissed as against the defendant Myer Rittenberg and the defendant Morris Finkelstein.

"5. That the defendant Curtis and Pope Lumber Company on October 15, 1919, held the property in question as equitable mortgagee of the plaintiff, to secure any indebtedness due to it from the plaintiff and Martin Flynn, her husband, including moneys expended in the completion of the garage and dwelling house.

"6. That the plaintiff is entitled to an accounting from the Curtis and Pope Lumber Company for the difference between the fair value of the equity of redemption conveyed to the defendant Rittenberg on October 16, 1919, and the amount secured by said equitable mortgage, after making all proper charges and credits.

"7. That the case be recommitted to the master to take the account from the Curtis and Pope Lumber Company of the equity of redemption conveyed to the defendant Rittenberg on October 16, 1919, and the amount secured by said equitable mortgage after making all proper charges and credits."

The plaintiff and the Curtis and Pope Lumber Company appealed -- and the judge, "Being of the opinion that the interlocutory decree, entered June 16, 1922, in above entitled cause, from which decree the plaintiff and defendants duly claimed appeal, so affects the merits of the controversy that the matter ought before further proceedings to be determined by the full court, . . . [reported] the case to the Supreme Judicial Court for that purpose upon the substituted bill of complaint, the defendant's answers, the master's report, the exceptions thereto, the memorandum and order for decree, the interlocutory decree, the plaintiff's apDeal and the defendant's appeal and the defendant's petition for report."

We shall consider the questions raised as far as possible in the order in which they are presented in the briefs of the plaintiff and defendants. The plaintiff contends that the foreclosure notice and sale thereunder on March 19 was invalid for the following reasons: (1) Because the notice gave the date of sale as March 19 without any year; (2) Be cause the mortgagee knowingly employed an unlicensed auctioneer; (3) Because there was no one present to bid; (4) Because the mortgagee cannot directly or indirectly purchase the property himself, unless the mortgage so pro vides; (5) Because a mortgagee with a power to sell must be personally present at the sale, and cannot appoint an agent to make the sale unless authority to make such appointment is granted in the instrument; and (6) Because an auctioneer, where there are no bids, cannot bid in the property for the mortgagee, the mortgagee not being present.

The master's findings upon unreported evidence in relation to the notice of foreclosure and the conduct of the sale succinctly stated are as follows: The sale was advertised to take place on Tuesday, March 19, (the year being omitted) at...